Beijing has signalled it is unlikely to scrap fuel price caps anytime soon, on concerns any change to the existing subsidy system will expose the poor to record high global oil prices. The National Development and Reform Commission said that the current policy for domestic refined oil prices 'helped maintain social and economic stability'. Policymakers, who had hoped to gradually wean the country off subsidised fuel, are now concerned any changes to the existing policy will anger farmers and the less well off who rely on cheap fuel. Zhang Guobao, vice-chairman of the country's top economic policy planner, told Xinhua that suspension of reforms of the retail fuel price would stabilise social and economic development. 'If we raise domestic retail prices to international levels at the same time as oil prices are surging to records, it will definitely have a huge impact on agriculture and other industries,' Mr Zhang said. 'This could bring even more severe harm than that caused by the high oil price itself.' Analysts and economists said the move was not surprising and forecast the government might provide more subsidies to mainland oil refiners who faced rising crude costs but could not raise selling prices. Oil soared more than US$10 in New York on Friday to a record US$139.12 a barrel. There are now forecasts it will reach US$150 this summer, fuelled by the traditional peak season for consumption and the Beijing Olympic Games. China Petroleum and Chemical Corp's (Sinopec) refining division posted an operating loss of 20.63 billion yuan (HK$23.3 billion) in the first quarter from a profit of 4.37 billion yuan a year earlier. The last retail fuel price rise on the mainland was in November last year when domestic prices grew 8 to 9 per cent. Since then international crude oil prices have surged almost 40 per cent, with domestic refined product prices remaining unchanged. Morgan Stanley chief economist Wang Qing estimated a 10 per cent rise in retail fuel prices would likely lead to a 0.3 to 0.4 percentage point rise in the consumer price index. Refiners, such as No2 oil and gas producer Sinopec, remained the hardest hit under the price caps and Beijing might have to provide more assistance, said Timothy Fung, an analyst at Credit Suisse. 'Many small to mid-sized refiners have given up production since they lose money by refining. This intensifies fuel shortages, which occurred earlier this year and is looming large during the Olympics. To have a steady supply, the government might provide more subsidies [to the big refiners],' he said. Facing the huge burden of subsidising oil, several countries in the region raised retail fuel prices last week. Malaysia announced a price rise of 47.8 per cent last Thursday while India raised prices 10 per cent to 15 per cent on Wednesday. Yuan Gangming, an economist at the Chinese Academy of Social Sciences, predicted the government would scrap retail price caps next year when inflationary pressure eased. Morgan Stanley said there would be no price rise before the Olympics but the probability of an increase would rise substantially afterwards.